Yes, you read that correctly. It is likely that a standard requiring providers of individual advice to retail clients to act in the best interests of their clients will be effective on July 1, 2012. Advice providers will be banned from receiving a variety of payments that raise concerns of conflicts of interest including: many commissions; payments based on volume; and significant soft dollar payments Legislation and regulation are in process after multiple years of study and consultations. There are no exceptions for broker-dealers who happen to provide advice or for those who provide advice on money employees are saving for retirement through their work-based retirement account.
Not aware that this is so close to implementation? That is because it is happening in Australia, not in the U.S. The project is known as the Future of Financial Advice (FoFA). In general, the new FoFA standards and requirements will be imposed across the board on the provision of individual advice to retail clients.
This week the Australian Securities & Investments Commission (ASIC) announced, http://www.asic.gov.au/asic/asic.nsf/byHeadline/11-294AD%20ASIC%E2%80%99s%20plans%20for%20FoFA%20reforms?opendocument its plans to issue guidance on the reform. AS part of the FoFA reforms, ASIC's powers will be expanded.
Australia's approach should be interesting to everyone in the U.S. watching the DOL and SEC efforts to enhance the quality of financial advice to individual, retail investors, including those investing through their 401(k) accounts and IRAs.
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